A Small Company Produces Two Goods, Swords and Plowshares

question 29

Multiple Choice

A small company produces two goods, swords and plowshares.The company has 100 type alpha employees and 100 type beta employees.If an alpha devotes all his time to producing swords, he can make 3 swords per week.If he devotes all his time to producing plowshares, he can make 6 plowshares per week.A beta can produce either 1 plowshare per week or 1 sword per week.The company wants to produce 324 swords and as many plowshares as it can.How many type betas should it employ at making swords?

• A)0
• B)85
• C)24
• D)100
• E)None of the above.

---

Definitions:

Total Variable Cost

The total of all costs that vary with the level of production, such as materials and labor costs.

Total Fixed Cost

The sum of all costs that do not change with the level of production or output in the short term, such as rent or salaries.

Purely Competitive Market

A market structure characterized by many buyers and sellers, homogeneous products, and free entry and exit, leading to price taking behavior.

Marginal Cost

Marginal cost is the cost incurred by producing one additional unit of a product or service.